Gussin v. Gussin

• Decision Date: 01 September 1992
• Docket Number: No. 14966,14966
• Citation: 836 P.2d 484,73 Haw. 470
• Parties: Lisa GUSSIN, Plaintiff-Appellant, v. Daniel A. GUSSIN, Respondent-Appellee.
• Court: Hawaii Supreme Court

Page 484

836 P.2d 484

73 Haw. 470

Lisa GUSSIN, Plaintiff-Appellant, v. Daniel A. GUSSIN, Respondent-Appellee.

No. 14966.

Supreme Court of Hawai'i.

Sept. 1, 1992.

Syllabus by the Court

1. There is no fixed rule for determining the amount of property to be awarded each spouse in a divorce action other than as set forth in Hawaii Revised Statutes (HRS) § 580-47 (Supp.1990). HRS § 580-47 gives to the family court the discretion to divide marital property according to what is just and equitable.

2. When the directive to the court is to do what is just and equitable in the circumstances, each case must be decided upon its own facts and circumstances. This does not mean that the court may do whatever it pleases. A grant of discretion means that the court has a range of choice, and that its decision will not be disturbed as long as it stays within that range and is not influenced by any mistake of law.

3. Discretion denotes the absence of a hard and fast rule. When involved as a guide to judicial action, it means a sound discretion, that is to say, a discretion exercised not arbitrarily or wilfully, but with regard to what is right and equitable under the circumstances and the law, and directed by the reason and conscience of the judge to a just result.

4. This court has avoided, where possible, the adoption of general rules governing the division of marital assets because such general rules create rebuttable presumptions that narrow the discretion of family court judges and are thus repugnant to HRS § 580-47.

5. Family court judges should not be bound by a rule that automatically presumes a predetermined division of marital property.

6. Marriage is a partnership to which both parties bring their financial resources as well as their individual energies and efforts. In divorce proceedings regarding division and distribution of the parties' estate, partnership principles guide and limit the range of the family court's choices.

7. It is the function of appellate courts to review the trial court's decision to determine whether it leaves the parties in a position that satisfies the factors outlined in HRS § 580-47.

8. The partnership model of marriage provides the necessary guidance to the family court in exercising its discretion and for appellate review.

9. Uniform starting points, as mandated by the Intermediate Court of Appeals, are violative of HRS § 580-47 because they restrict the family court's discretion in the equitable division and distribution of the estate of the parties.

10. Appreciation of property separately owned at the time of marriage or acquired during the marriage by gift or investment and still separately owned at the time of divorce is a marital asset subject to division after consideration of all relevant circumstances of the case.

11. Marital appreciation of property separately owned at the time of marriage or acquired by gift, inheritance or investment, which is subject to division, includes that which is due to inflation or other economic factors, and family courts shall not adjust such property for inflation.

Peter Van Name Esser and Willard J. Peterson of Peterson & Esser, and Paul A. Tomar, Honolulu, for petitioner-appellant.

Charles T. Kleintop and Carolyn O. Tavoularis of Stirling & Kleintop, Honolulu, for respondent-appellee.

Before LUM, C.J., and WAKATSUKI, MOON, KLEIN and LEVINSON, JJ.

MOON, Justice.

We granted certiorari to review the Intermediate Court of Appeals's (ICA) affirmance of a portion of the divorce decree, 9 Haw.App. 279, 836 P.2d 498 (1991), entered by the Family Court of the First Circuit, relating to the division and distribution of the approximately $820,000 estate of petitioner-appellant Lisa Gussin (Wife) and respondent-appellee Daniel A. Gussin (Husband), pursuant to Hawaii Revised Statutes (HRS) § 580-47. In her application for a writ of certiorari, Wife contends that the ICA erred in 1) rejecting her transmutation theory and determining that there was no evidence that Husband gifted certain of his separate properties to Wife or to the estate of the parties during the marriage; 2) affirming the family court's division of during-the-marriage appreciation of Husband's separate property at 85% to Husband and 15% to Wife; and 3) affirming the family court's use of an inflation factor, based on the Consumer Price Index, as to Husband's separate property, which inequitably increased Husband's portion of the estate.

We also review, pursuant to Hawaii Rule of Appellate Procedure (HRAP) 31(e)(4)(A), ¹ the ICA's mandate that family courts' division and distribution of the estates of parties in divorce proceedings must commence at "uniform starting points" (USPs). Following our review of the law in this jurisdiction, we hold as a general matter that USPs, as mandated by the ICA, restrict the family court's discretion in violation of HRS § 580-47. Based on our review of the record in this case, we conclude that the ICA's mandate restricted the family court's discretion, and we are thus compelled to vacate the portions of the divorce decree relating to the division and distribution of the marital appreciation derived from Husband's separate property. Additionally, we conclude that the ICA erred in holding as a matter of law that there was no evidence of gift by Husband to Wife or to the marital estate during the marriage. We therefore remand this case for further proceedings consistent with this opinion.

I. BACKGROUND

The parties in this case were married on May 6, 1983, separated on February 23, 1989, and divorced on January 17, 1991. There was one child born of the marriage on November 14, 1986. The estate of the parties subject to division and distribution was valued at approximately $820,000.00. In dividing and distributing the parties' estate, the family court utilized categories of property, the property's net market value (NMV), and USPs developed and mandated by the ICA in its prior cases.

The ICA's five-category classification of property and "property net market values" took the ownership, the time of acquisition, the manner of acquisition, and the during-marriage increase in the value of marital assets into account and designated "uniform starting points" (USP) from which the family court's "equitable distribution analysis and application of statutory and case law mandates[ ]" should begin.

Myers v. Myers, 70 Haw. 143, 150, 764 P.2d 1237, 1242 (1988) (citing Hashimoto v. Hashimoto, 6 Haw.App. 424, 426, 725 P.2d 520, 522 (1986)) (footnotes omitted), recon. denied, 70 Haw. 661, 796 P.2d 1004 (1988). The five categories are:

Category 1. The net market value (NMV), plus or minus, of all property separately owned by one spouse on the date of marriage (DOM) but excluding the NMV attributable to property that is subsequently legally gifted by the owner to the other spouse, to both spouses, or to a third party.

Category 2. The increase in the NMV of all property whose NMV on the DOM is included in category 1 and that the owner separately owns continuously from the DOM to the [date of the conclusion of the evidentiary part of the trial (DOCOEPOT) ].

Category 3. The date-of-acquisition NMV, plus or minus, of property separately acquired by gift or inheritance during the marriage but excluding the NMV attributable to property that is subsequently legally gifted by the owner to the other spouse, to both spouses, or to a third party.

Category 4. The increase in the NMV of all property whose NMV on the date of acquisition during the marriage is included in category 3 and that the owner separately owns continuously from the date of acquisition to the DOCOEPOT.

Category 5. The difference between the NMVs, plus or minus, of all property owned by one or both of the spouses on the DOCOEPOT minus the NMVs, plus or minus, includable in categories 1, 2, 3 and 4.

Malek v. Malek, 7 Haw.App. 377, 380-81 n. 1, 768 P.2d 243, 246 n. 1 (1989).

The USPs for dividing the NMVs under the various categories are as follows:

Categories Percentage

1 and 3 100% to the owner and

0% to the non-owner

2 and 4 75% to the owner and

25% to the non-owner

5 50% to the husband and

50% to the wife

See Hashimoto, 6 Haw.App. at 427-28, 725 P.2d at 522.

At the time of the marriage in this case, Husband owned several assets, including $42,982 in cash and an apartment in the Mauna Luan with a NMV of $33,000. Sometime during the marriage, the Mauna Luan apartment was sold and the proceeds from the sale, as well as the $42,982 in cash, were deposited into accounts held jointly by the parties. Monies from these funds were subsequently used to purchase the marital residence on Waialae-Iki Ridge in 1986 for $300,000, which at DOCOEPOT was determined to have an equity or NMV of $583,000. The title to the home was held jointly. The parties worked together in finding the lot, negotiating the price, obtaining plans, designing the interior, locating a contractor, purchasing materials, supervising construction, installing tile and carpet, planting and landscaping, and furnishing the residence.

In accordance with the ICA's required process, the family court "categorized" the $42,982 in cash and the $33,000 NMV of the Mauna Luan at DOM and declared the total amount of $75,982 as Husband's separate property under "category 1." The court applied an inflation factor of 1.3296 ² to the $75,982, which increased the value to $101,026 to reflect "late 1989, early 1990 dollars." The court then subtracted $101,026 from the residence equity of $583,000, leaving a balance of $481,974. The court awarded the entire $101,026 to Husband, consistent with the 100% owner-0% nonowner USP under category 1, and divided the $481,974 and other marital assets 50% Husband-50% Wife under category 5.

Although Wife acknowledges that the $75,982 was originally Husband's separate property, she maintains that such monies had been "transmuted" ³ into marital property or gifted to her when it was commingled with...